Mr. Sam Anidjar reports

ENGHOUSE RELEASES FIRST QUARTER RESULTS

Enghouse Systems Ltd. has released its first quarter (unaudited) financial results for the period ended Jan. 31, 2024.

Highlights for the first quarter ended Jan. 31, 2024, compared with the same period in the prior year:

• Revenue increased 13.2 per cent to $120.5-million compared with revenue of $106.4-million.
• Recurring revenue, which includes software-as-a-service and maintenance services, grew 27.2 per cent to $84.6-million and now represents 70.2 per cent of total revenue.
• Results from operating activities improved to $32.6-million from $29.9-million while achieving a 28.8-per-cent EBITDA (earnings before interest, taxes, depreciation and amortization) margin. Adjusted EBITDA was $34.7-million compared with $32.3-million.
• Cash flows from operating activities, excluding changes in working capital, were $35.6-million compared with $32.6-million.
• Net income was $18.1-million compared with $17.0-million.

As the software market continues its transitions toward SaaS offerings, the company is generating an increasing proportion of recurring revenue streams within its overall revenue model, which now represents 70.2 per cent of its total revenue in the first quarter of 2024.

Its operational expenditure has declined as a percentage of revenue, consistent with its objective of generating operational efficiencies despite the inflationary pressure on operating costs. This focus on efficiency is part of its broader objective of maintaining a lean operational model that supports its growth ambitions without compromising the bottom line. Despite these challenges, its cash position has increased in the quarter, providing the resources necessary to continue to pursue new acquisition opportunities that it believes will enhance its market position and offer long-term shareholder value.

A key advantage Enghouse has in this high-interest-rate operating environment is its debt-free status and a closing cash, cash equivalents and short-term investments balance of $247.4-million, affording it the flexibility and agility to make investments without the burden of external financial constraints. This positions it uniquely in the market, enabling it to pursue acquisitions and invest in further expanding its product suite.

Subsequent to quarter-end, on Feb. 12, 2024, Enghouse completed the acquisition of Mediasite assets, which offer a suite of SaaS video solutions, as well as expanding Enghouse's presence in the Japanese market. The acquisition was completed for a cash purchase price of $15.5-million (U.S.).

Quarterly dividends

Today, the board of directors approved an increase in the company's eligible quarterly dividend to 26 cents per common share, an increase of 18.2 per cent over the prior dividend, payable on May 31, 2024, to shareholders of record at the close of business on May 17, 2024. This represents the 16th consecutive year in which the company increased its dividend by over 10 per cent.

About Enghouse Systems Ltd.

Enghouse is a Canadian publicly traded company (Toronto Stock Exchange: ENGH) that provides mission-critical vertically focused enterprise software solutions. Its core technologies are used for contact centres, video communications, virtual health care, telecommunications networks, public safety and the transit market. The company's two-pronged growth strategy to increase earnings focuses on organic growth and acquisitions, which, to date, have been financed through operating cash flows, as the company has no outstanding external debt financing. The company is organized around two business segments, the interactive management group and the asset management group due to its unique customer segments and technology offerings.

Conference call and webcast

A conference call to discuss the results will be held on Thursday, March 14, 2024, at 8:45 a.m. EST. To participate, please call local 1-289-514-5100 or North American toll-free 1-800-717-1738. The confirmation code is 74715. A webcast is also available at the Enghouse website.

We seek Safe Harbor.